In yet another multi-party scheme thatallegedly abused Florida's notoriously flawed personal injury protection (PIP) system, authorities havearrested 19 people and issued warrants for six others.

According to a release by Florida CFO Jeff Atwater, ValerieMarshal, a 24-year-old licensed massage therapist and theproprietor of Indian Rehabilitation Center, Inc. (IRCI) wasarrested at her Tampa home last week, along with 18 othersfor their suspected involvement in a string of staged accidents andfraudulent insurance claims.

The state attorney's office believes Marshal opened IRCI inSeptember 2011 with the intent of defrauding insurers and quicklyenlisted individuals to orchestrate staged accidents for which theywould feign injury and, in many cases,only pretend to obtain medical treatment at her clinic.Those implicated in the case include accident participants,accident facilitators, clinic billing personnel, and clinicmanagers.

Law enforcement officials were able to shut down theJacksonville, Fla.-based clinic following an investigationconducted by the Florida Department of Financial Services' Divisionof Insurance Fraud and the Duval County State Attorney's office.Their combined investigative efforts uncovered fraudulent medicalbilling practices related to 80 IRCI patients and more than$228,000 in claims filed with insurance providers. In addition tothe 19 apprehended, the state attorney's office issued six arrestwarrants (currently outstanding) for others involved in thescheme.

A New Year, Chapter In PIP

Large busts such as this may eventually deter would-be criminalsfrom committing PIP fraud, thereby alleviating theexorbitant "fraud tax" Floridians pay in higherpremiums. 

"These large-scale accident clinics are at the root of the PIPfraud problem in Florida," CFO Atwater says. "We must stay one stepahead of the ring leaders [of] these schemes so [our]drivers are protected and safe on the roads." 

Aside from investigative due diligence, staying "one step ahead" meansimposing stricter guidelines, as evidenced by the amendments to theFlorida Legislature that took effect on January 1, 2013.

"Florida has more cases of PIP fraud than anyother state in the nation, and Orange County is the third highestsource of fake auto insurance claims in the state" says LynneMcChristian, the Florida representative for the InsuranceInformation Institute (I.I.I.). "[Residents] are paying more thanthey should for auto insurance because insurers are paying morethan they should for claims."

Ostensibly, the newly revised PIP guidelines make it harder forauto claimants to collect, thereby weeding out the fraudsters fromthe truly injured. As part of the changes, individuals injured incar accidents must adhere to a 14-day window during which they canseek initial treatment as opposed to the previous policy thatimposed no time limit. Furthermore, policyholders are now eligiblefor $2,500 in coverage, a marked decrease from the $10,000previously allowed.

These reforms also force insurers to reduce their PIPrates by at least 25 percent by 2014; however, insurers may be ableto petition the government to be excluded from suchrequirements. 

Despite the Fla. law's mixed reception thus far,some industry experts feel stricter guidelines—and stifferpenalties—represent the most viable option at present.

"This is a measure to keep those costs in check, and consumerswill eventually benefit if the measures work as they are intended,"McChristian concludes.